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Published: Wednesday, April 04, 2012
Page: 1A

Kanawha County commissioners have asked the West Virginia Housing Development Fund to reinstate rules that require low-income housing developers to secure local support before the agency awards federal tax credits for projects.

In a recent letter, Kanawha County Commission President Kent Carper told state housing officials that local government leaders should have some say into whether the housing projects are funded and built. Carper said the Housing Development Fund should never have rescinded the local-support requirement in 2009.

"I believe that public input and approval provides an extra layer of protection to the people and taxpayers of West Virginia," Carper said. "Why did they take that away to begin with?"

Housing Development Fund board members plan to discuss Carper's request at an April 19 meeting.

Mason County commissioners also support restoring the local support requirement.

"They changed it, but they never told anyone why," said Mason County Commission President Rick Handley. "It's really sad. And you wonder why people don't trust government."

On Tuesday, the Housing Development Fund's acting executive director would not comment on why the agency eliminated the local-support requirement, citing an ongoing federal investigation.

"I was not involved in those decisions at that time," said Erica Boggess, who was named acting director last fall. "I'm hesitant to comment at this time."

For more than a decade, the Housing Development Fund required project applicants to submit a letter of support or no opposition from local officials.

In June 2009, the Housing Fund's board voted unanimously to strike the requirement from the agency's "Qualified Allocation Plan," a document that sets ground rules for developers who apply for low-income tax credit financing.

The decision came a month after Mason County commissioners rejected a request from Charleston developer Douglas E. Pauley and state Treasurer John Perdue, who wanted the commission to issue a letter to the Housing Development Fund supporting Pauley's plans to build an apartment complex for seniors and the disabled near Point Pleasant.

Perdue, who serves on the Housing Development Fund board, later sold Pauley 11 acres of land in Mason County. Pauley built the housing project - called Milton Place and named after Perdue's late father-in-law - on Perdue's former property.

The Housing Fund's decision to strip the decade-old local-support requirement paved the way for Pauley's project to be funded and constructed.

The agency distributed $3.67 million in federal stimulus funds to Pauley for the project in December 2010.

A federal grand jury is now investigating the deal.

The Milton Place project was completed last winter, but nobody is living there.

The Housing Fund's latest Qualified Allocation Plan is up for a vote on April 19. The agency's past two allocation plans haven't included the local-support stipulation. Such plans - every state's housing financing agency has one - detail the selection criteria and application requirements for housing tax credits.

Boggess wouldn't say whether she would recommend that the agency reinstate the local-support provision.

"It's a board decision," she said Tuesday. "The board is going to review that and make a determination."

Last Friday, Carper had two letters hand-delivered to Boggess at the Housing Fund's headquarters in Kanawha City.

In one letter, Carper notified Boggess that the Kanawha County Commission opposes Pauley's plans to build a 32-unit apartment complex on Knollwood Road north of Charleston. Carper urged the Housing Development Fund not to award Pauley federal tax credits to build the low-income project.

Carper's second letter asked for the Housing Development Fund to reinstate the requirement that developers, such as Pauley, secure local officials' support before the housing agency approves federal tax credits.

At a meeting last month, Knollwood Road residents spoke out against Pauley's project, saying the site is inappropriate for a low-income apartment complex. Residents fumed after learning that Pauley didn't have to get the Kanawha County Commission's approval to build.

One Knollwood Road homeowner recently filed a Freedom of Information Act with the Housing Fund, seeking information about the local-support requirement. Housing officials haven't responded.

"I think the comments and concerns from the residents of Knollwood were valuable and deserve to be heard before this project proceeds further," Carper wrote in last Friday's letter to Boggess. "I was disappointed to see that Doug Pauley was quoted as saying, 'There's no longer a condition for me to get the county's approval' in reference to his proposed 32-unit apartment project in Knollwood."

Earlier this week, Handley sent an email to Carper, saying he supported Carper's stand on the Knollwood project.

Handley also warned Carper that Pauley and the Housing Development Fund might retaliate against the commission.

In 2009, a Housing Fund administrator suggested to Pauley that he file a federal housing discrimination complaint against Mason commissioners, after they refused to support Pauley's Milton Place project.

Without the support letter, Pauley's project wasn't eligible for federal funding under the Housing Development Fund rules at the time.

Pauley filed the complaint, alleging that Mason commissioners discriminated against the elderly and disabled.

The U.S. Department of Housing and Urban Development sent investigators from Philadelphia to Mason County. HUD agents interviewed Handley and commissioners Miles Epling and Bob Baird.

Epling, a U.S. Marine Corps veteran who received a Purple Heart for wounds suffered during the Vietnam War, lost both his legs in battle. Baird was 76 years old when Pauley filed his discrimination complaint.

HUD investigators never returned to Mason County or issued a report on their findings.

For months, Mason County commissioners presumed Pauley had dropped the project,

Commissioners inquired about the project's status, filing a Freedom of Information Act request with the Housing Development Fund in March 2011.

"Did the Housing Development Fund allow the Milton Place development to participate in the low-income housing tax credit program without local approval as required by law?" Mason County Manager John Gerlach asked in a 2010 letter to the Housing Development Fund.

Weeks later, former Housing Fund executive director Joe Hatfield provided a one-sentence answer: "Local jurisdiction approval of the project is not required under federal law."

"We were never told when they changed the local jurisdiction requirement," Handley said. "They just did it and started building. Why did they change it?"

Pauley, a Perdue campaign donor, is cooperating with federal prosecutors. Perdue has said he followed "all legal procedures" while selling the Mason County property to Pauley.

Reach Eric Eyre at or


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